Friday, July 01, 2005

The grip tightens

Such is the concern in the US Congress about the threat of China and the leakage of technology via European enterprises that further controls have been imposed on technology transfers, aimed at discouraging EU from lifting its arms embargo on China.

These controls are embodied in The East Asia Security Act of 2005, which was passed on 29 June, authored by Republican U.S. Representative Henry Hyde. The Act was introduced after an uproar that followed the EU's announcement last December that it was considering lifting the embargo.

Although action on lifting the embargo has stalled, congressional officials are saying that the Hyde bill adds a measure of insurance. "This bill is intended to show that the US Congress intends to encourage the EU to keep its commitment to maintain its arms embargo, and not to falter in this commitment," a senior aide to Hyde said.

The particular concern is that technology sales could proceed indirectly via various loopholes, since some European firms which reportedly have aided Beijing's military build-up are also participants in leading-edge US weapons programs.

Amongst other measures, the legislation calls Bush to make an annual report to Congress "identifying every foreign person of the EU that has exported to China any arms or dual use technology for military end use since 1 January 2005." The legislation would also require any entity seeking to export US weapons technology to China to obtain special permits from the US State Department.

While this initiative has been generated by Congress, Pentagon officials are also considering whether further restrictions are needed. At the moment, they are struggling to define the level of controls applicable to dual-use technology after it was discovered that a minor component used in the Joint Strike Fighter (JSF) was also being offered to China by a European company.

Lt. Gen. Jeffrey Kohler, director of the Defense Security Cooperation Agency described the part as a "non-descript circuit board." It is not top secret and not even particularly high-tech, but its fate is causing the US much heart-searching as it provides evidence that technologies used in American weapons could find their way to China through partnerships with European companies.

Officials are worried that there are not enough safeguards in place and want to know more about European companies' business dealings with China. But there also concern that tightening controls may hamper normal commercial exchanges and some officials are anxious to resolve differences over which technologies may and may not be sold to the China.

The most serious possible scenario is the transfer of stealth technology and tech-transfer restrictions created for the JSF's development phase need to be re-examined as foreign firms in the JSF partnership move into production, which will require more technology sharing.

More restrictions would not be welcome news to non-US companies, which are saying that the United States is already being too restrictive with technology and information — a complaint raised by several JSF partners that have spent or will spend billions on the programme. BAE Sysytems, which is a key technology partner, is even hinting that Britain's continued participation may turn on the US attitude toward sharing more technology.

"It is fundamentally important for UK sovereignty that technology transfer should take place related to the JSF to ensure that the UK has the ability to provide sovereign support and to maintain and upgrade the aircraft during its long in-service life," says Mike Turner, the CEO of BAE Systems.

Lt. Gen. Kohler is less than sympathetic, asserting that partner companies are getting the information they need to do their assigned work. "What do they want us to do - turn over the blueprints, the stealth technology or the radar we've been working on for the last 10 years? We don't need to," he says. The JSF program is not meant to be a stealth technology seminar, he adds, "The U.S. has made 10 times the investment into JSF [than its partners]. I think there are limits to what we should share."

Although Kohler claims he has not received complaints from governments involved in the project, sources in the UK disagree. "The British government has two main issues over JSF production: work share and technology transfer," one source said. "They may not be aired in the media - the British prefer diplomacy and bilateral talks - but behind closed doors, the concerns are real and strongly voiced."

Partners say they need more access to information to maintain and modify the aircraft. Tightening the rules, they say, could increase costs and create headaches. Britain and Italy are interested in hosting JSF regional maintenance centers and final assembly lines, both of which will require extensive transfer of technology.

Air Chief Marshal Sir Jock Stirrup, the Britain's chief of the air staff and soon to become chief of the Defence Staff, obliquely outlined his concerns last October. "The effect I want to see is an ability to adapt the aircraft quickly and affordably when we need to," Stirrup told the Defence Select Committee. "If the system of adapting, modifying, the aircraft is so cumbersome that we cannot do it in operational time scales, then that will be a serious encumbrance."

US industry representatives are none too keen on the idea of tightening restrictions either, especially as commercially available components may be caught in the net. Some are suggesting that the US government is controlling too much and not focusing attention on the things that ought to be controlled.

The US is also being told that over-rigorous controls might alienate its allies and irritate its friends – and undermine its industrial and economic interests. But it has such good evidence of technology leakage to the Chinese from Europe that it does not seem minded to give European companies the benefit of the doubt.

That is what happens when trust starts to break down and, with the UK working ever-closer with EU member states on defence issues, British access to US technology is likely to suffer. This could be damaging for the projected aircraft carrier project, being undertaken in co-operation with France, especially as the US suspects the designs will be passed on to China, which has ambitions to build her own aircraft carrier fleet to challenge US naval supremacy in the Pacific.

We could, therefore, find ourselves in the position of seeking to build carrier to fly US aircraft – in this case the JSF – without access to the technology which enables us to operate them, prejudicing the viability of the whole project.

Thus, as the US grip tightens, we are drawn ever closer to that point when our government is going to have to decide whether who its real allies are. The traditional rôle of the UK providing a "bridge" between Europe and the US no longer looks sustainable.